Think Outside the Gift Box

By Chuck Jaffe
MarketWatch

When it comes to gifts, people frequently hear how "it's the thought that counts." They usually hear that when they've given a gift that's lame, something the recipient doesn't particularly like or enjoy.

When it comes to giving good "financial gifts," the thought behind the gift truly will determine just how much it is appreciated.

There are books and software programs and countless items that purport to help people handle and manage money better.

Typically, any of these items can be good, but the gift won't get much traction if the recipient doesn't already have an interest in the author's shtick. Without that interest, even the best financial book goes down like bad medicine.

For truly innovative financial gift-giving, however, think outside of the wrapped box. To take your gift-giving in some more unusual directions this year, make sure that the thought really does count.

You can do that by giving family and friends the gift of:

Stocks and mutual funds don't look like much under the tree, but they also won't be forgotten and stowed away come New Year's Day.

The real gift is not so much in the monetary value of the shares, but in the education that comes with it. Several fund companies have "gift of shares" programs, but those are mostly a marketing ploy where the recipient gets a certificate and an application.

While a handful of funds are built to be gifts, you can do just as well picking a fund on your own and seeing if it has lower minimum requirements for accounts opened up for children.

For a list of low-minimum investment funds, check out the Web site for the Mutual Fund Education Alliance at www.mfea.com.

In stocks, making small purchases is a concern; it can be tough to feel good about your choice if commission costs eat up a big chunk of your gift budget.

Sites such as buyandhold.com, sharebuilder.com, and mystockfund.com can be low-cost alternatives, or get a list of stocks that offer shares direct to the public by requesting a free issue of the DRIP Investor newsletter at dripinvestor.com.

Otherwise, talk to your brokerage firm and, if you use a full-service broker, ask if it can discount commissions to establish an account for a minor.

Look for stocks that the recipient can relate to. Where appropriate with children, make sure the gift includes some education, enough so that the children can decide what's important in stock selection and how they might invest on their own in the future.

But don't forget about stock as a gift for grown-ups too; if you have a friend or relation who likes attending annual meetings, shares in a stock that holds shareholder meetings nearby can be a fun and thoughtful choice.

Over the years, I have talked to many people who say their aging parents haven't handled their estate planning or done appropriate financial planning. Typically, one stumbling block has been a reluctance to pay for what these Depression-era survivors feel is an expensive service.

If you can afford to pay for these services and know someone who has been reluctant to get it done, consider giving a gift of planning.

One friend who followed this advice a few years back was sure his parents would never go to the adviser; instead, they didn't want to waste the money he had spent and thought it was a great idea.

This is a gift that is designed to provide peace of mind, but it must be handled delicately. That said, siblings teaming up can often pay for the kind of help that will allow the parents to rest easy and that will provide everyone in future generations with something of a reward.

For many people, pleasant company, or a helping hand, is better than cash.

You can brighten someone's holidays -- particularly someone who is hard to buy for -- by helping them complete household chores or other tasks, by giving them a few hours to volunteer for their favorite organization and more. It will bring you closer together in a way that most conventional gifts can't.

The holidays are a time when bills tend to mount, not shrink. Given the typical consumer's debt load, a gift that pays a bill might be welcome relief.

Odd as it sounds, this might be particularly good for teenagers. A study conducted by U.S. Trust found that one-third of all teenagers owe money to a person or company and that nearly half of those indebted children are worried about paying it back.

Whether teenagers or adults, a little bit of help can be much more valuable than any "thing" they might want (those wanted "things" tend to be what created the debt problem in the first place).

While I'm not a huge fan of big, free bailouts, giving debt-relief as a gift means the money is not "free." Instead, it's the money that would have gone to a traditional gift, a present that has now been sacrificed to pay the bills.

There's a lesson in that, namely that you can lose a lot of life's niceties to the crush of debt. (Don't go beyond your normal spending level to do this, or you run the risk of sending a message that you will be there for future bailouts, rather than simply giving gifts for future holidays.)

This is a gift to help your loved ones fulfill their good intentions, and can be a great choice for the proverbial person "who has everything."

Supporting the recipient's favorite charity truly is a gift where the thought counts (be sure to secure any available matching donations provided by your employer to make it count more).

For kids, however, I have a favorite holiday charity-gift tradition that might be worth copying. It's the gift of a check, made out except for the payee. To "get" the money, the kids must give it away.

They pick the charity -- and must value it sufficiently to make their own small donation too -- but they get some input of supporting the things you value, which creates an impression that lasts a lifetime.

In situations where you can raise the subject delicately, consider not exchanging gifts this year.

Rather than assuming that you are the only one who hates trying to "keep up" with the giving habits of others -- or simply trying to find the right thing for someone who lives half a country away and who you see infrequently -- have a chat with people you exchange gifts with.

If their feelings match yours, take a pass on the presents for 2006, or agree to lower your budgets.

No one who loves you would actually want you to go into long-term, hard-to-pay-down debt for the privilege of receiving a gift. And if you are adding to the typical household credit debt burden, today's present may not be paid off for years.

For many people, the best alternative to buying more "stuff" is to buy no stuff at all.

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